By Jacob M. Schlesinger and Dudley Althaus
MEXICO CITY -- President Donald Trump's chief trade negotiator
issued a downbeat assessment Tuesday of efforts to rewrite the
North American Free Trade Agreement, decrying "a lack of headway"
and accusing Canada and Mexico of refusing to "seriously engage" on
controversial U.S. proposals aimed at cutting the U.S. trade
deficit.
U.S. Trade Representative Robert Lighthizer didn't go as far as
repeating Mr. Trump's threat to pull out of the 23-year-old pact if
the other parties don't agree to American demands to "rebalance"
Nafta to make it more favorable to the U.S. But he made clear he
expected them to do so by next month.
"Absent rebalancing, we will not reach a satisfactory result,"
Mr. Lighthizer said in a statement following the conclusion of the
fifth round of Nafta renegotiation talks that ended here Tuesday.
"I hope our partners will come to the table in a serious way so we
can see meaningful progress before the end of the year," he
added.
Canadian and Mexican officials agreed that wide gaps remained
between the parties after five days of talks, but placed blame
squarely on the U.S. for putting forth a list of proposals that
they said would weaken the pact, and would move its longtime focus
away from creating a continental economy among the three partners
to one that would do more to favor the U.S. over its neighbors.
"Significant differences remain on some key areas," Canadian
Foreign Minister Chrystia Freeland, who is leading her country's
negotiating team, told reporters in Ottawa. While Canada is open to
"mutually beneficial" compromises, she said, "at the end of the day
we are always going to clearly defend our national interests."
The Mexicans also dug in during this week's meetings. "Do not
expect a counterproposal on something that is unacceptable," said a
person close to the Mexican team.
The three countries have agreed to keep negotiating until the
end of March, and have scheduled informal meetings with midlevel
negotiators in December and another formal round in Montreal in
late January.
This week's talks in Mexico were the fifth round since the three
countries launched the process of rewriting Nafta in August, after
Mr. Trump came close early in his administration to pulling the
U.S. out.
The renegotiation is the first major effort in Mr. Trump's
"America First" campaign to reorient decades of U.S. trade policy
and overhaul its trade agreements to focus less on cooperation with
trading partners and more on ramping up unilateral enforcement
actions to curb imports.
The mood among Nafta supporters has darkened considerably in the
past month after Trump aides laid out in detail the ways in which
they want to change Nafta, proposing that cars have 50% U.S.
content to enjoy duty-free imports into the U.S., and seeking to
slash Mexican and Canadian access to U.S. government projects.
Other controversial proposals would weaken or eliminate Nafta
mechanisms for settling disputes among parties, and inject a
"sunset" clause that would automatically terminate the agreement
after five years unless the three countries expressly agree to keep
it.
U.S. business groups have ramped up an extensive lobbying and
public relations campaign aimed at persuading the Trump
administration to soften its stance. Failing that, they want
free-trade Republicans in Congress to try to rein in the Republican
president. Business groups and economists have been churning out
myriad studies warning of the dire impact a Nafta collapse would
have.
Mr. Lighthizer's assessment overshadowed a more positive tone
offered by lower-level negotiators from all three countries, who
touted a number of advances they made this week in less
controversial areas. "Progress was made in a number of chapters,"
negotiators said in a trilateral statement issued at the end of the
round.
While Mexico and Canada have rejected the Trump administration's
"rebalancing" agenda, all three countries have embraced proposals
to "modernize" the pact.
Much of the week's discussion focused on applying plans the
three had already accepted in previous negotiations for the
12-nation Trans Pacific Partnership, which Mr. Trump pulled the
U.S. out of at the start of his administration. Despite the
president's objections to TPP, his aides have used large portions
of that as a template for modernizing Nafta.
Officials said progress was made in digital trade,
telecommunications, harmonizing regulatory practices, fighting
corruption, food safety standards, and streamlining customs
procedures.
There appeared to be some tentative discussions feeling out of
compromise on some of the more controversial U.S. proposals.
Mexican negotiators put forth a counterproposal to the U.S.
"sunset" provision, rejecting the idea of an automatic termination
clause, but offering more rigorous regular reviews of the pact.
Talks were more difficult on other U.S. demands. Mexicans and
Canadians both derided an American proposal to limit their access
to the government procurement market to the dollar amount of their
own, considerably smaller, markets. Mexico offered a mocking
counterproposal that would limit U.S. access to the same tiny
amount that Mexican firms win in U.S. government bids, a plan that
would essentially nullify large contracts American insurance firms
have to cover Mexican government workers. Canadian officials said
the U.S. proposal would give them less access than Bahrain to the
U.S.
The most difficult issue hanging over the talks is the American
proposal aimed at shifting auto production back from Mexico to the
U.S. American officials have signaled as their priority in these
negotiations -- aimed at cutting the U.S. automotive trade deficit
with Mexico that has ballooned under Nafta.
But that has prompted a fierce backlash from representatives of
the American auto industry, which says the proposal would lower
their efficiency and force more production to Asia.
Mexican and Canadian negotiators have cited studies by U.S.
industry backing those claims in rejecting the U.S. proposals.
"This is just a non-starter for us," said a Canadian official.
"It won't just create economic damage for us, but it will do
economic damage to the U.S."
A senior U.S. official told reporters that the Trump
administration wasn't wedded to its specific proposals, and was
very flexible on the details -- as long as the other countries
agreed to work toward U.S. goals.
"We're extremely flexible and extremely open to alternatives to
develop new text," he said. "These are our priorities, and you do
expect other countries to engage with you on that and not just be
critical."
--Paul Vieira in Ottawa and William Mauldin in Washington
contributed to this article
Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com and
Dudley Althaus at Dudley.Althaus@wsj.com
(END) Dow Jones Newswires
November 21, 2017 20:49 ET (01:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.